Issue Date: May 31, 2010
Where Chemists Go After Big Pharma
For British pharmaceutical chemists, the news in recent months has been grim.
In February, GlaxoSmithKline revealed that it would end neuroscience research at its Harlow site. Some 380 scientific positions were set for elimination among roughly 1,000 overall job cuts. The next month, AstraZeneca dropped the boom on its Charnwood laboratories, announcing the loss of about 1,200 jobs, mostly in R&D.
These downsizings follow Merck & Co.’s 2008 closure of its basic research labs in Terlings Park, which employed close to 300 researchers, and Roche’s earlier downsizing of facilities in Welwyn. Pfizer, meanwhile, has been quietly cutting back on staff at its storied Sandwich research labs, where Viagra and several other big sellers were discovered. In a position statement released last month, the London-based Royal Society of Chemistry estimated that several thousand U.K. jobs have been lost at large pharmaceutical companies over the past few years.
Amid the carnage, though, one bright spot for British scientists stands out: contract research organizations. These companies, known as CROs, provide pharmaceutical industry clients with drug discovery services ranging from structural biology to medicinal chemistry to absorption, distribution, metabolism, and excretion (ADME) studies.
As big pharma cuts chemistry jobs in the U.K., CROs are adding them, albeit at a slower pace. The Royal Society says CROs currently employ more chemistry graduates in the country than pharmaceutical companies do. The executives leading these firms worry about what all the downsizing will mean for their businesses in the long term, but for now the job cuts are a source of highly experienced employees and sometimes even new business.
the U.K. pharmaceutical and biotechnology industries employed 67,000 people in 2008 and contributed more than $6 billion in R&D investment to the local economy, according to the Association of the British Pharmaceutical Industry. At least 10 of the current top-selling drugs worldwide have U.K.-trained chemists named as inventors, the Royal Society notes.
But with the research site closures, big pharma is dismantling much of the infrastructure that created those drugs. These days, laboratories run by the CRO Evotec in Abingdon, England, near Oxford, may well house the largest group of chemists at any site in the U.K., notes Mark Ashton, Evotec’s executive vice president for business development.
The Abingdon site was established in 1992, when Oxford University professor Stephen G. Davies founded Oxford Asymmetry International as a chiral chemistry specialist. Over the years, OAI morphed into a multioffering chemistry CRO. The German biology services firm Evotec acquired it in 2000 for about $475 million, and today the firm employs about 250 people in Abingdon, 150 of whom are chemists.
Since mostly ending its own drug discovery effort last year, Evotec is focused on its service business. In August, it acquired the Indian chemistry CRO Research Support International, adding about 160 employees in Mumbai, and it is looking to hire in Abingdon, as well. In particular, Evotec has been interviewing chemists from GSK’s Harlow site, Ashton says, with the goal of recruiting proven drug discoverers.
Big pharma’s downsizing is accruing to Peakdale Molecular even more dramatically. Founded in 1992 by chemist Ray Fisher, Peakdale operates laboratories in Chapel-en-le-Frith, England, that employ 90 scientists who provide medicinal chemistry services to pharmaceutical industry customers.
In February, Peakdale signed an agreement with the biggest of big pharma, Pfizer, under which Peakdale will set up a second chemistry center at the drug company’s Sandwich R&D labs. The immediate goal is to create a team of 50 chemists, although Fisher says he foresees a time when Peakdale could employ 250 people at the site.
Explaining the genesis of the pact, he notes that Peakdale has worked with Pfizer for more than 15 years. After the 2009 acquisition of Wyeth and the subsequent R&D downsizing, Pfizer executives saw Peakdale as a company that could help maintain Sandwich’s synthetic chemistry capabilities while occupying some of the real estate available there.
“The idea is to use the site to bring in new blood and new ways of thinking,” Fisher says. Initially, the Peakdale chemists will work for Pfizer, but his goal is to branch out to other pharmaceutical customers, some of which may also set up in Sandwich.
Interestingly, Fisher anticipates that only a handful of Peakdale’s initial 50 employees in Sandwich will be from Pfizer. He says senior Pfizer chemists who find themselves out of work are more likely to join biotech firms or set out on their own than return to the bench with a CRO.
Peakdale’s direct gain from big pharma’s loss is unusual. Most CROs work more with small and medium-sized drug companies than with the industry’s giants. For them, the impact of changes at big pharma is usually indirect: As big companies shrink their internal research organizations, they increasingly get their drug candidates from small biotech firms, which often rely on CROs.
Case in point is RespiVert, a London-based biotech founded by two former GSK scientists and academic collaborators. In 2007, RespiVert signed a two-year medicinal chemistry services deal with Sygnature Chemical Services, a CRO based in BioCity Nottingham, in Nottingham, England.
Sygnature chemists recently delivered preclinical drug candidates in two of RespiVert’s respiratory disease programs. Now, larger drug companies interested in licensing the candidates are courting RespiVert, says Simon Hirst, Sygnature’s chief executive officer. “The Pfizers of the world are not our clients,” Hirst says, “but the people they are interested in getting products from are our clients.”
Hirst, a chemist, formed Sygnature in 2004, after nine years with the Swedish firm Astra plus stints at other companies. Today, Sygnature has 35 employees, 30 of whom are chemists. Of those, Hirst says, about three-quarters are Ph.D. chemists who have completed postdocs. For ADME services, Sygnature maintains an alliance with fellow British CRO Cyprotex Discovery.
Sygnature moved into new labs late last year and is now looking for six to eight new chemists. Hirst recently hired Prem Meghani, an 18-year AstraZeneca veteran, to fill a senior position. More typical openings are the listings currently on Sygnature’s website for analytical support and synthetic research chemists with graduate degrees and two years of experience in the pharmaceutical industry.
Eddy Littler, CEO of Cambridge-based Domainex, has also been hiring. The first half of 2009 was tough for the nine-year-old CRO, he acknowledges, but business started to pick up in September. More recently, requests have been flowing in.
Domainex employs 28 people, three-quarters of whom are chemists and the rest biologists. The firm’s ranks include scientists who until recently worked at GSK’s Harlow site. Many of Domainex’ employees, Littler adds, have worked at big pharma companies plus one or more biotech firms—a background that he’s happy to exploit.
“There are things you can learn at big pharma that you can’t learn anywhere else in the world,” he says. “Then at a biotech, scientists learn how to work in a cost-effective and rapid way. The result is a powerful set of people who are very experienced.”
Littler, who himself worked for GSK and the biotech firm Medivir, says Domainex’ customers are mostly biotechs, nonprofits, and academic groups. As he explains, the firm’s experienced scientists and its technology—including LeadBuilder, a virtual screening system that can do the job of expensive compound libraries—are well suited for smaller organizations without a lot of internal chemistry resources or expertise.
Biotechs and nonprofits are important to the larger British CROs, as well. BioFocus, a division of the drug discovery firm Galapagos and one of the largest U.K. contract research firms, recently announced a five-year collaboration worth up to $41 million with CHDI Foundation, a nonprofit pursuing therapies for Huntington’s disease. The deal was BioFocus’ largest ever, according to Chris Newton, senior vice president of Galapagos Services, who notes that the likes of Genentech and Merck & Co. are also among the firm’s clients.
The Huntington’s disease pact was one of two high-value deals signed this year, Newton says. The other was Galapagos’ $24 million acquisition of Argenta Discovery, another prominent U.K. CRO. Although Argenta and BioFocus will operate independently to avoid conflicts of interest related to clients, the overall organization is impressive: 390 people, of whom 250 are chemists based in the U.K.
Newton doesn’t think the U.K. has a lock on contract chemistry research. After all, Evotec’s headquarters are in Germany, and another big Western chemistry CRO, AMRI, is based in the U.S. Moreover, the largest competitors—firms such as WuXi PharmaTech, Shanghai ChemPartner, ChemBridge, and GVK—are from Eastern Europe or Asia.
But Newton does see a special ability at his and other U.K.-based firms to succeed at drug discovery collaborations that require true idea generation. “There’s a long-standing interest in finding new medicines in the U.K.,” he says, “and there’s an entrepreneurial spirit among U.K.-based scientists who have come down from the more closed world of big pharma.”
Given the blood-letting at the historic stalwarts of the British drug industry, Newton and his CRO industry colleagues are concerned about their country’s long-term viability as a pharmaceutical powerhouse. Domainex’ Littler notes that the industry must look less appealing to chemistry graduates these days. “Every time there’s a major layoff, I’ve been amazed at the capability of the Cambridge biotech sector to soak people up. But in the last two to three years, for the first time you can tell it’s saturated,” he observes.
At the moment, though, the future looks bright for the country’s contract research organizations. Littler calls recent business advances at Domainex and its competitors “a measure of the fact that the service business in the U.K. is dynamic and vigorous. Our order books are absolutely full, and it looks like they’ll be full for some time.”
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